Quote from WALLACE29:
I was hoping to buy and sell thru the course of the day and not have to rely on dealing with margins. I do not quite know why, but I have a fear of dealing with margins.
As an Example:
I have a $35,000. cash account and thought I could buy $35,000. of stock in the morning then sell it.
Take the proceeds of the prior transaction and buy another stock the same day
Last I heard, you can't do this in a cash account at some brokerages, including IB. It's considered free-riding. Just open a margin account. You don't actually have to ever use margin - it just enables you to re-use the proceeds of a sale on the same day, without waiting for it to settle.
Also that the value of the ccount does not fall below $25,000.
Right - you need to keep your account equity at least $25K or you'll be restricted to the 3/5 rule again.
Am I interpreting the rules correctly or will this trading style result in a margin call.
Someone didn't read their account material carefully
IB does not issue margin calls. They liquidate positions to bring you in line, and/or prevent you from doing things that could result in a margin violation (like exceeding initial margin requirements, opening a 4th trade after 3 day trades in the last 5 days in a margin account with <$25K, or re-using proceeds of a sale in a cash account).
I was hoping to buy and sell thru the course of the day and not have to rely on dealing with margins. I do not quite know why, but I have a fear of dealing with margins.
As an Example:
I have a $35,000. cash account and thought I could buy $35,000. of stock in the morning then sell it.
Take the proceeds of the prior transaction and buy another stock the same day
Last I heard, you can't do this in a cash account at some brokerages, including IB. It's considered free-riding. Just open a margin account. You don't actually have to ever use margin - it just enables you to re-use the proceeds of a sale on the same day, without waiting for it to settle.
Also that the value of the ccount does not fall below $25,000.
Right - you need to keep your account equity at least $25K or you'll be restricted to the 3/5 rule again.
Am I interpreting the rules correctly or will this trading style result in a margin call.
Someone didn't read their account material carefully
IB does not issue margin calls. They liquidate positions to bring you in line, and/or prevent you from doing things that could result in a margin violation (like exceeding initial margin requirements, opening a 4th trade after 3 day trades in the last 5 days in a margin account with <$25K, or re-using proceeds of a sale in a cash account).